Thank you, Madam Speaker. I was just going to bask in the green glory here, but I do think I need to follow up with some questions that my colleague MLA Bisaro brought up to the Minister of Finance about the Heritage Fund and budget issues.
My question to the Minister of Finance is: He indicated that if Members on this side want to put 25 percent into the Heritage Fund that we’re going to have to find that money. I’m just wondering why the Minister of Finance feels we need to find that money. This heritage resource revenue sharing money is brand new this year. Why are we finding money that is brand new? This is money that we should be spending as extra and it should not be an issue to find that money. It should already be available to us.
Thank you, Mr. Bouchard. The honourable Minister of Finance, Mr. Miltenberger.
Thank you, Madam Speaker. As I tried to lay out in the budget yesterday, we look at what our revenue is, what our projected revenue is and look at what our expenditures are. Within the budget, we’ve already committed to fund, in capital, over $200 million of capital projects. This O and M budget, because we are required under our Fiscal Responsibility Policy to put aside the required amount to offset that, we are supposed to put half our money in savings. We’ve done that. So all our expenditures and the borrowing we’ve done to fund all the projects, all our expenses, leave us at $142 million between us and the borrowing limit, the current $800 million.
So, clearly, we don’t have a lot of room to move. One of our priorities is to maintain a $100 million cushion which is absolutely critical to give us the flexibility to be responsive to unanticipated events, crises, expenditures.
So in order to keep on our target and on our path, we need to make sure that we hit these numbers. So if we want to increase the Heritage Fund, we’ve done our budgeting on 5 percent of those revenues being in the Heritage Fund, which won’t actually start to flow into our coffers until 2015-16, then we need to find offsets. We’re prepared to do that, but it’s not just a case of just spending more money because, in effect, we would be borrowing money at a higher interest rate to put into the Heritage Fund, which would generate a lower rate of interest than we have to pay to borrow the money. It doesn’t make sense at this point. We can afford 5 percent and do all the other things that we’re asked to do and we need to do as a government. Thank you.
I understand what the Minister is saying. I guess the Minister didn’t get the message that we sent in the fall when we sent a motion forward saying we wanted to indicate 25 percent to the Heritage Fund, 25 percent to reducing debt, but they went ahead and built a budget based on 5 percent. Now we’re asking them to answer to that and why they went ahead and spent that money before we even had a chance to put our wishes forward. I guess the question is: Did they ignore the 25 percent request we did in the fall?
No, we did not ignore that request. We have spent a lot of time consulting, working with committee on the main estimates that are before this House. In my budget address, we laid out what we used in calculating and determining that budget, and one of those factors was as we looked at all the variables that are before us, the challenges, the financial issues, we saw the way forward as a government with 5 percent, recognizing that we had to meet these other objectives as well.
The committee recommended to us 25 percent. We heard that, as well, in other parts of the territory as well as we heard other specific numbers in other parts of the territory. At the end of the day we had to make choices.
We have come forward with this budget and now we’re going to be here for six weeks having the discussion. We are tasked, sent away, build a budget and bring it to this House so we can have that debate and now we are having that debate. Thank you.
I do realize we are going to be having this discussion because I think on this side we are determined that that 25 percent is something we need to see for the future generations of this Northwest Territories. These resources are being taken out of the Northwest Territories and won’t be available for the future generations.
The 25 percent, Madam Speaker, is what we’re debating. They’ve indicated that we won’t get the money until 2015-2016, yet we are going ahead basing capital budgets on that money.
Can the Minister explain to me how we are doing that if we don’t have that money yet? Are we borrowing against money that we are expecting to have?
Yes, we are engaged in short-term borrowing and some long-term borrowing, as I laid out in my budget address yesterday. When you look at all the numbers and when you look at the capital plan, the O and M budget, the things we are trying to do, we end up with $142 million left between ourselves and the $800 million borrowing limit. We’ve added to our borrowing to meet some of the objectives that we’ve laid out as a government and as a Legislative Assembly. So for the next five years, we are going to be in a cash deficit situation to manage our way through what are going to be some very big projects, things like the concluding of the Tuk-Inuvik highway, but of even more and greater cost is the $350 million that we have to put towards Stanton at $40 million a year over four years with a balloon payment at the end.
We’ve had a drop in our income tax, corporate and personal income tax, and we are coming forward with some appropriations to look to offset or pay for some of the significant increases we’ve had in demand-driven services provided mainly to Health and Social Services. So, as we manage all those factors, this is what we are putting before the House as we move forward. Thank you.
Thank you, Minister Miltenberger. Final supplementary, Mr. Bouchard.
Thank you, Madam Speaker. The Minister of Finance has indicated all these issues and all these projects that we have on the go and, granted, we are doing great things with a lot of them, but I think the essence comes down to the $30 million loss of revenue that we’re seeing in corporate income tax. He’s indicated that the department didn’t anticipate this. So why is it that we do not know what we’re receiving in income tax from one year to the next where we have to receive that last minute and make us on this side of the House look like the bad guys for wanting to put money away for the future generations? Why can’t we see the revenue projections farther ahead?
Thank you. I don’t think it’s a case of anybody being bad guys. We are looking at a budget. We agree on the Heritage Fund, we agree on keeping the money out of programs and services, we agree to put some in the Heritage Fund, some in capital and some for debt repayment. Now we’re having a spirited, healthy debate about how much and how do we manage that along with all the other obligations we have and the factors and the variables we have to look at that are financial pressures on us.
In terms of corporate income tax, as we’ve laid out a number of times, it’s a very complicated process. The corporations, businesses can reach back many years to decide when they’re going to file, what they’re going to file, where they’re going to file, and we always are operating on projections. We have indicated to MLAs that rather than wait for the projections from the federal government, we’re going to start using our own five-year projections to give us a better idea of what the potential corporate income tax will be, and in some cases we have businesses and industries, mines that have yet to pay any royalties because they’re writing off all of their expenses. So there are a lot of factors when it comes to corporate income tax and why it’s such a hard-to-predict number. Thank you.
Thank you, Minister Miltenberger. The Member for Range Lake, Mr. Dolynny.
